FAQs: The Loan Process
How does buying a home compare with renting?
Purchasing a home enables you to receive tax benefits while building equity. Owning a home also gives you the freedom to personalize and decorate as you wish and gives you the personal satisfaction of owning your own home
Should I prequalify before I find a property?
Yes, prequalification can help determine how much money you will be eligible to borrow before the loan application process occurs. You will know upfront how much home you can realistically afford. It also lets Realtors and sellers know that you’re a serious buyer, which can be an advantage when making an offer.
How does a Lender determine how much I can afford?
Your Lender will consider a number of factors when determining your maximum loan amount. Some of these include: your debt-to-income ratio, cash available for down payment and closing costs and credit history.
What is an appraisal?
An appraisal compares the current market value of the home you’d like to buy to other homes in the area that have recently been sold. A recent appraisal is necessary to confirm the property’s current value.
What is an interest rate lock?
An interest rate lock represents rate you selected and will be the interest rate used to factor your monthly payment. The lock-in secures the interest rate during the process of your loan approval as long as your loan is processed and closed prior to the rate expiration date.
What are closing costs?
Closing costs are fees that both buyer and seller must pay at closing. They generally include:
- Origination fee
- Discount point(s)
- Appraisal fee
- Credit report
- Recording fees
What documents will I receive at closing?
At closing, you’ll sign and receive copies of all legal documents that are recorded and filed for the property you’re purchasing. In addition, you will receive information regarding your monthly mortgage payment and servicing information for your new loan.